European natural gas jumped the most in almost two months as risks to LNG supplies mounted amid the possibility of worker strikes at some facilities in Australia.
(Bloomberg) — European natural gas jumped the most in almost two months as risks to LNG supplies mounted amid the possibility of worker strikes at some facilities in Australia.
Benchmark futures soared as much as 21% after increasing in the previous two sessions. Oil and coal also advanced.
Workers at facilities of Chevron Corp. and Woodside Energy Group Ltd. in Australia have voted to strike, which has the potential to affect liquefied natural gas exports from the country as global competition for the fuel rises. The timing of the industrial action — if it goes ahead — wasn’t immediately clear.
Asian buyers “are likely to bid up LNG imports” to replace Australian volumes if there are disruptions, which will affect Europe as well, said Nick Campbell, a director at consultant Inspired Plc. “LNG has become a baseload supply in the European gas supply mix, therefore any signs that this flow is at risk leads to support in price.”
Separately, potential delays in Norway’s seasonal maintenance also pose a risk, adding to upward price pressure. For now at least, bullish factors are outweighing tepid demand and unusually high stockpiles in Europe.
Markets also seem to have difficulty “in pricing the mismatch” between healthy winter inventories and risks for the cold season amid increased tensions in Russia’s war against Ukraine, said Ole Hansen, head of commodities strategy at Saxo Bank A/S.
Dutch front-month futures, Europe’s gas benchmark, traded 21% higher at €37.74 a megawatt-hour by 1:39 p.m. in Amsterdam. The UK equivalent added 20%.
–With assistance from Carolynn Look.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.